Exclusive data obtained by Middle East Eye (MEE) has revealed that Aviva Investors, the asset management subsidiary of the United Kingdom’s largest general insurance provider, acquired $108 million in Israeli government bonds during a major $6 billion international bond issuance in late January, a move that defies a growing trend of divestment from Israeli assets among major British institutional investors.
The transaction, documented by Amsterdam-based sustainability research firm Profundo in a dataset shared exclusively with MEE, saw Aviva Investors take up positions across all three tranches of the January issuance: $45.7 million in five-year bonds, $25.7 million in 10-year bonds, and $36.4 million in 30-year bonds. This purchase marks the largest single British investment in Israeli sovereign debt captured in Profundo’s dataset, which tracks international investor participation in Israeli bond sales between late 2024 and early 2026. Only a small handful of non-UK firms – including German insurer Allianz and American investment giants BlackRock, Vanguard, and Wellington Management – placed larger orders in the January issuance, and Aviva Investors’ acquisition ranks as the 16th largest non-Israeli investment in Israeli bonds over the full period tracked by the research.
Following Aviva Investors, the next largest UK buyers in the January sale were asset manager Schroders and banking group HSBC, whose combined purchases amounted to only a small fraction of Aviva’s total holding. US and German investors currently dominate the international market for Israeli sovereign debt, according to Profundo’s analysis.
When contacted by MEE for comment, parent company Aviva plc confirmed the holding but sought to separate its own brand from the transaction, noting that “Aviva plc has no exposure to Israeli government debt.” A company spokesperson added that Aviva Investors manages portfolios on behalf of third-party clients, and that the firm’s aggregate client exposure to Israeli government debt is “very limited” and has been “significantly reduced” since the end of January. While the company declined to provide further details, MEE has confirmed that Aviva Investors’ current holding stands at roughly $40 million, down nearly 63% from its original $108 million purchase.
Aviva Investors manages approximately £262 billion ($353 billion) in assets for more than 25 million customers across the UK, Ireland, and Canada. Industry data shows that 39% of UK adults hold at least one policy from the Aviva group, giving it a larger customer base than most major British high street banks.
For Israel, international sovereign bond sales have become an indispensable source of funding for its ongoing military operations across Gaza, Lebanon, and Iran, as the country grapples with a rapidly expanding wartime fiscal deficit. Israel issued a historic $75 billion in bonds in 2024 and followed that with $60 billion in new issuance in 2025, with roughly 15% of annual government financing coming from foreign investors. Sovereign bonds are generally viewed by institutional investors as a low-volatility asset that delivers steady fixed interest payments, but human rights advocates argue that Israeli sovereign debt carries unique ethical, legal, and financial risks that set it apart from ordinary government debt.
“There is a well-documented link between the proceeds of Israeli bond deals and the country’s military spending in Gaza and beyond,” explained Anne-Marie Brook, an economist and co-founder of the Human Rights Measurement Initiative. “This creates a substantially different risk profile from ordinary government financing – and makes continued involvement by bondholders significantly harder to defend, both in terms of ESG [Environmental, Social, and Governance] obligations and potential legal exposure.”
Israeli Finance Minister Bezalel Smotrich has publicly confirmed this link, framing last year’s national budget – which is funded in large part by international bond issuances like the January offering Aviva joined – as “a war budget. And with God’s help, it will also be the victory budget.”
The January $6 billion issuance, Israel’s first major international bond sale after a ceasefire took effect in Gaza, drew overwhelming global demand, with an order book totaling $36 billion – six times the amount offered – from more than 300 institutional investors across 30+ countries. Israeli officials framed the strong demand as proof of ongoing international investor confidence in the country’s economy, and a return to prewar borrowing costs. The strong demand came even though all three major global credit rating agencies have downgraded Israel’s sovereign credit rating over the past two years amid rising wartime fiscal risks.
The speed of Aviva Investors’ post-purchase drawdown is notable: Profundo’s data confirms the firm held no Israeli government bonds prior to the January issuance, meaning it entered the market, built a position, and cut it by more than half within just a few months. There are multiple plausible financial explanations for the rapid reduction: it is common for investors to purchase bonds at initial issuance and sell quickly to lock in capital gains if borrowing spreads tighten, while client redemptions, benchmark index rebalancing, or internal risk limit adjustments could also drive a rapid sell-off. Israel’s January bonds were initially priced with a large premium to compensate investors for wartime risk; as that premium shrank in subsequent weeks, early buyers were able to sell at a profit, a path Aviva Investors may have taken.
Regardless of the motivation, the purchase puts Aviva Investors at odds with a clear shift among large UK institutional investors, a growing number of which have moved to divest Israeli assets amid grassroots and activist pressure. In August 2024, for example, the Universities Superannuation Scheme (USS), the UK’s largest private pension fund with over 500,000 members, sold £80 million ($108 million) in Israeli assets including government bonds after sustained pressure from scheme participants.
The Aviva group as a whole has already faced years of activist pressure over its financial ties to Israel, and has already moved to cut other links to Israeli-related defense businesses. In January 2025, Palestine Action activists occupied Aviva’s Bristol offices over the firm’s insurance coverage for UAV Engines Ltd, a British manufacturer whose drone components were linked to an April 2024 Israeli air strike that killed seven aid workers, including three British military veterans. A March 2025 report from the Boycott Bloody Insurance campaign, endorsed by 22 civil society organizations, named Aviva as one of the top global insurers complicit in Israel’s military campaign in Gaza. By late 2025, Aviva had ended its insurance coverage for Elbit Systems UK, a major Israeli defense contractor’s British subsidiary, after months of protests, and the firm’s liability insurance for UAV Engines Ltd expired in September with no renewal.
This makes Aviva Investors’ decision to purchase Israeli government bonds even more notable: the transaction came even as other parts of the broader Aviva group were cutting financial ties to Israeli arms manufacturers.
The broader political and regulatory landscape around Israeli sovereign bond investment has shifted dramatically across Europe in recent months. In September 2025, the Central Bank of Ireland stepped down from its role as the European Union’s designated approving authority for Israeli government bond prospectuses, after mounting pressure from activists and elected officials. Israel subsequently moved its EU bond approval process to Luxembourg, an outcome that underscores how Israeli bond sales have become a deeply contested political and legal issue across the continent.
The International Court of Justice’s January 2024 provisional ruling that Israel’s actions in Gaza could plausibly amount to genocide has prompted dozens of European financial institutions to seek formal legal guidance on whether holding Israeli government bonds aligns with their fiduciary duties and international human rights obligations. A recent report from the Amsterdam-based Centre for Research on Multinational Corporations notes that under global standards for responsible business conduct, financial institutions should avoid investing in sovereign debt issued by governments suspected of committing war crimes.
For UK asset managers that market their funds to clients on the basis of strong ESG performance, the legal and reputational risks of holding Israeli sovereign debt have grown sharply in recent months. New UK greenwashing rules implemented by the Financial Conduct Authority in May 2024 require all regulated financial firms to ensure their client communications around ESG are clear, fair, and not misleading. For a firm like Aviva Investors, which positions itself as a leader in responsible ESG investing, holding Israeli sovereign debt while its parent company cuts ties to Israeli arms manufacturers creates an inconsistency that could attract regulatory scrutiny.
Aviva’s attempt to frame the holding as a client-driven decision offers little protection under these rules: as an asset manager, Aviva Investors retains ultimate responsibility for investment allocation decisions for client capital.
At its core, the transaction confirms that Aviva Investors chose to participate in one of Israel’s largest ever international bond issuances, only to cut its position dramatically within weeks. Whether that rapid reversal was driven by market forces, client pressure, growing reputational and regulatory risk, or a combination of all three, remains unclear.
